ERP Features: The 6 Core Components of ERP
First things first - What is ERP?
ERP stands for Enterprise Resource Planning. This is the process of integrating each part of a business making it more efficient, profitable, and aligned.
An ERP system, specifically cloud ERP, is a powerful solution to streamline and integrate various business processes across different organisational departments. It acts as a centralised back-office platform that enables companies to manage and automate critical functions such as finance, human resources, inventory management, supply chain, and customer relationship management.
By implementing ERP software, businesses can improve efficiency and productivity by eliminating redundant and manual tasks. The software provides real-time visibility into various business operations, allowing decision-makers to make informed choices based on accurate and up-to-date data. It facilitates collaboration and team communication, enhancing coordination and improving cross-functional workflows.
ERP software offers modules tailored to specific industry requirements, enabling organisations to customise the system to meet their needs. With tailored features like compliance, data analytics, reporting, and forecasting capabilities, ERP software empowers companies to gain actionable insights, make data-driven decisions, and adapt to changing market dynamics.
ERP software is crucial in enhancing operational efficiency, optimising resources, and driving business growth by providing a comprehensive and integrated solution for managing core business processes.
Project ERP Solution
If you’ve researched Enterprise Resource Planning (ERP) software then you’ve probably been presented with information on solutions that are designed for businesses that create products, not those that deliver services.
For this reason, it may appear that ERP systems are not relevant if you are a project-based business. However, project-based ERP is a thing, and it’s designed specifically for businesses that deliver projects across the project lifecycle.
Project ERP is an ERP solution that is specifically designed for businesses that deliver projects and includes functionality that supports every stage of the project lifecycle. This means there is less focus on supply chain and inventory management and more project management functionality.
What are the 6 Main Components of ERP?
1. Customer Relationship Management (CRM)
Delivering successful projects is the lifeblood of your company and that means that you need to prioritise winning new business and retaining existing clients. The CRM component in a standard ERP solution means that you can accurately track your client or customer and opportunity data.
When it comes to CRM for project-based businesses there are a few nuances that need to be considered. For example, the CRM component in a Project ERP tracks different information relevant to people resources rather than products and materials. This gives visibility to the projects that are being pursued and the potential resources needed to deliver them.
Having this information to hand enables project-based businesses to forecast potential revenue and monitor resource requirements and other expenses. They can then identify which projects they should be pursuing and how much these will cost to deliver so that they can submit competitive proposals.
Tracking resource requirements for current and future projects leads into the next Project ERP component, project management, which allows businesses to plan and deliver their projects effectively.
2. Project Management
Planning, visibility, and control are everything when it comes to project management. Today's Project ERP systems work broadly enough and deeply enough to process and deliver timely information about every aspect of a project, regardless of how many are running at once.
An ERP system replaces the need for separate and disparate platforms, which are limited in that they can only give a partial view of a project at any given time. The project management component of project-specific ERP integrates resourcing, finance, and project scheduling data and monitoring of project-specific key performance indicators (KPIs) such as Estimate to Complete (ETC) and Estimate at Completion (EAC), so that project managers can more proactively manage projects and make timely, profit-related decisions at any stage of the project lifecycle.
For any project and service-based company, accurate time and expense tracking is of utmost importance. Yet capturing it can be challenging. Project ERP systems are designed to track and record employee time and expense data to the right projects easily and in a timely fashion. This ERP component not only feeds directly into invoicing so that a firm gets paid faster, but it also plays an integral part in monitoring the resources allocated to a project on an ongoing basis, giving the project manager greater control.
3. Human Capital Management (HCM)
Employees are your most valuable asset. You rely on them to deliver successful projects to your clients and in return your clients pay from your team’s expertise. Having access to HCM functionality connected to your ERP solution enables your HR and project management teams to effectively manage recruitment, talent management, workforce management and development, resource forecasting, planning, payroll and time and expense.
This makes it easier to ensure that all time spent on your projects is budgeted for, tracked and billed to the client. Project managers and team leaders can delegate workloads to ensure successful project delivery without burning out employees. HRMS and resource planning solutions can enable teams to better anticipate future project staffing needs and anticipate potential requirements.
4. Project Accounting and Financial Management
Probably the most well-known feature of an ERP system is its ability to store and retrieve a firm's financial data, such as accounts payable and receivable, costs, budgets, general ledger and forecasting figures. The accounting solution takes complex transactional data and turns it into meaningful profit information and insights for the user.
How does this differ for project-based businesses? Basically, they need a 360-degree view that integrates business accounting and project data, as well as client accounts. By integrating and processing financial data on all three levels, a Project ERP system gives a complete picture, from overall business performance through to the profitability of individual projects.
Having this data to hand supports the need for greater business intelligence (BI) which is also supported by your ERP.
5. Business Intelligence, Predictive Analytics and Real-time Reporting
Being able to collate and review data to support business decision-making is essential for organisations across all industries. For project-based businesses however, reporting requirements differ due to the nature of being service-driven with successful projects as the deliverable.
Having all your data linked via an ERP platform means that you have one place to assess performance and metrics by project, department, client, project manager, vendor, etc. Your Project ERP will also deliver this data in interactive dashboards.
The dashboard can deliver a view into multiple KPIs in one place including revenue, profit, backlog, resource utilisation, proposal win rate, cash flow, days sales outstanding or projects at risk. All of these are essential for optimum decision making at the business or project level. The dashboards can deliver the right information to the right people so they can make better decisions, but not be overwhelmed by data.
The requirement for firms to create and store documents, procedures and processes means ERP solutions are especially useful for managing compliance and best practice. The digital trail created by an ERP system means traceability and transparency are a given. The ease in which an ERP system organises and retrieves information makes it an ideal tool for passing audits, appraisals, and assessments easily and without fuss.
First, it enables companies to establish standardised processes and controls that align with regulatory requirements. This governance ensures that the organisation operates within legal boundaries and minimises non-compliance risk. Secondly, an ERP system allows for real-time monitoring and tracking of crucial compliance indicators, such as data privacy, financial reporting, and labor regulations. This data gives management visibility into potential compliance issues and facilitates timely corrective actions.
Furthermore, an ERP system enhances data integrity and security by centralising information and implementing access controls, reducing the risk of data breaches and unauthorised access to corporate data.
Lastly, an ERP system supports comprehensive audit trails and documentation, critical for demonstrating compliance during external audits and regulatory inspections. An ERP system is instrumental in promoting compliance oversight, safeguarding the organisation's reputation, and mitigating legal and financial risks.
The Power of a Complete Suite of ERP Functionality
Each component of an erp system is a powerful solution its own right. But it's a system's ability to integrate and incorporate the data from each of its separate modules that has such a positive impact on a business’s processes and profit. When it comes to getting the most from an Industry-specific ERP solution, companies and decision makers find that the true power lies in the combined sum of the parts rather than the individual erp components themselves.
Deltek enables project-based businesses with easy-to-use technology that scales seamlessly, to help achieve performance that maximises productivity and revenue across the project lifecycle. Our Cloud ERP software adapts and evolves with the needs of growing companies, providing the security, privacy, and flexibility businesses need while empowering their remote teams with an accessible, reliable platform.